Here’s another installment of real estate terms as we work our way through the alphabet for a better understanding of property investing and related transactions.

• Mortgage is a pledge that you make to a creditor as security for performance of an obligation to a debt or to repay that debt. Your Australian mortgage can be negotiated so don’t be afraid to ask.
• Mortgage Indemnity Insurance is insurance that you pay that benefits your lender. This type of insurance is designed to reimburse your lender if you borrow a high proportion of the value of your property and can’t keep up with your mortgage repayments. Your credit provider can insist that you pay for this type of insurance under Australian law.
• Mortgage Offset Accounts allow you to offset the interest charged on your mortgage by using a credit balance against the mortgage debt. For example is your mortgage is $200,000 and you have a credit balance of $50,000, the interest is only charged for the net balance of $150,000. These type of mortgages provide a lot of security by allowing you to access funds in the event of an emergency.
• Neighbors are the people and building that are in close proximity to your dwelling. Neighbors play a very big role in your happiness or unhappiness in an area. Make sure you check out the property that you are interested in at many different times of the day and night to get a feel for what your neighbors are like at these times. This way you can be sure that you are not moving in next to the all night parties, or the early morning noise makers.
• Open House is when a real estate agent opens up a house for a pre-determined amount of time to allow the public access to the home to view it. Open houses usually only last for a couple hours and are considered to be low pressure ways to generate a sale.
• Option Fee is a deposit that you give to a real estate agent to hold an option period allowing you to further consider purchasing the property without putting any money down on it. The money spent on the option fee will go to the vendor if you decide not to buy the property.
• Over Capitalized means that you have paid too high of a price for a property or that the property has been upgraded so much that it is worth much more than similar properties in the area. When real estate has been over capitalized it is difficult to recoup the investment.

Check back next time for the next installment to help you get a better understanding of real estate terminology.

Sean Rasmussen
Property Options Australia
Property Options Blog © 2006 - 2008

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